Monday, October 31, 2011

Competition and Cooperation in Society

In school I was taught that capitalism was a society of greedy people set against each other in cut throat competition, while socialism was a system of enlightened people who engaged in beneficial cooperation.

Okay kids! Which is a better society: Competitive capitalism or cooperative socialism?

It took me a long time to realize that my teachers were projecting false images on the free market.

The idea that one society is based on cooperation and another on competition is absurd because there are elements of competition and cooperation in all socio-economic systems. Societies that try to force cooperation through political might end up creating a culture where people viciously compete for political power.

Feudalism is a top-down society in which people competed for the benefit of their lord. In return the ruling elite would grant entitlements. As there is a limit to what a lord can entitle, competition for entitlements became fierce. Feudalism was a brutal society.

Democratic-Socialism is a top-down society in which the ruling elite competes for the favor of people by lavishing supporters with entitlements. This equation has proven as brutal as feudalism.

There is intense competition for political power in top-down social structures like feudalism and socialism. As government gets larger, the political class spends more and more resources to control the government.

Forced cooperation is better called "coercion." Socialism and Feudalism both try to coerce people into cooperation and end up with a diminished society.

Regardless, competition and cooperation are not the primary issue. Forms of cooperation and coercion exist in all socio-economic systems.

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Businesses need a steady stream of office supplies. When they buy from an office supply store they are effectively forming an alliance with that store in providing a good or service.

The foundation of the free market is freedom. Free individuals choose their own associations. I might choose to buy from store A instead of store B. I might sell labor to company C instead of company D.

The free market is a system of voluntary cooperation. Free individuals choose who they work with.

Every mutually beneficial trade in the free market is an act of cooperation. Trades involve people transacting goods and services to help each other achieve their different ends. Competition comes into play because free markets provide people with multiple choices. The competition is not the primary focus.

People have less say-so in who they compete against.

The idea that socialism is based on cooperation and capitalism is based on competition is bogus. All socio-economic systems have a mix of cooperation and competition.

What matters is the way that these ideas fit together. In a free market, businesses compete on their ability to cooperate with their customers. This leads to a better results than a system that attempts to impose cooperation that forces people to compete on base politics as we grub for limited entitlements.